U.S. Payroll Havoc Due to Holiday Shipments, Credit Suisse Says

John Hurley sorts packages at the 1.5 million square-foot United Parcel Service Inc. (UPS) Chicago Area Consolidation Hub in Hodgkins, Illinois. Photographer: Daniel Acker/Bloomberg

Feb. 8 (Bloomberg) -- Increases in online holiday shopping
that have spurred the hiring and firing of thousands of express
delivery workers is playing havoc with U.S. payroll data, and
indicates employment will rebound in coming months, according to
economists at Credit Suisse.

Employment at courier and messenger services, which include
workers at companies like FedEx Corp. and United Parcel Service
Inc., plunged by 45,000 in January after climbing by 46,000 the
prior month, according to figures from the Labor Department. The
swing in that one category, comprising 0.4 percent of all
payrolls, accounted for all the slowdown in employment last
month, and then some.

“It’s eye-popping to think that such a small industry
moved the whole payroll count,” Jonathan Basile, a Credit
Suisse economist in New York, said in an interview. “That tells
you that there are seasonal factors at work that the Labor
Department hasn’t been able to adjust. Think of the ways holiday
shopping has changed over the years. The government’s adjust
process is a slow-moving vehicle.”

Basile said government statisticians would likely take
several years to take the new hiring pattern into account.

Sales at non-store retailers, which include internet
merchants, climbed 2.6 percent in December, the most since April
2008, to a record $32.3 billion, according to figures from the
Commerce Department. In a Dec. 16 call with analysts, FedEx said
it had its busiest day on record three days earlier, and Chief
Executive Officer Fred Smith said more than half of last year’s
volume increase during the peak period was due to online retail
and catalog shipments.

Payrolls Climbed

Total payrolls climbed by 36,000 workers last month, short
of the 146,000 median forecast of economists surveyed by
Bloomberg News, after a gain of 121,000 in December. Excluding
couriers and messengers, employment would have climbed by 81,000
after a 75,000 December increase.

Basile, who wrote a research note about payrolls to clients
yesterday, said he would estimate an 80,000 gain in February
payrolls as a starting point for Credit Suisse’s forecast next
month, before adding increases in other categories.

Employment last month was “out of step” with other
measures of the economy, including business surveys and profits,
that point to a pickup in hiring, Basile said. “You are
building a case for a payroll number that is not just a little
better than January, but one that is a lot better,” he said.

To contact the reporter on this story:
Carlos Torres in Washington at +1-202-624-1818 or
ctorres2@bloomberg.net

To contact the editor responsible for this story:
Christopher Wellisz at +1-202-624-1862 or
cwellisz@bloomberg.net